Thinking beyond the knee jerk boiler plate:  is getting a court order to pay debt in your own name really a good idea?

By M. J. Goodwin

I see a lot of Family Court orders that read:  “Each party shall pay the debt in his or her own name.”  Sounds fair, right?  But is it really prudent or even necessary to have this order?  Maybe not, if the debts are not joint debts.

Married people borrow money.  Sometimes together (as joint borrowers) and sometimes not (as an individual borrower, think that American Express card that you got in your sole name).  If the debt was incurred during the marriage, it is marital debt and subject to equitable division by the Family Court.  If the debt is in both names (joint debt), it needs to be dealt with by the Court.  The best solution is obviously to pay off the joint debt.  Paying it off would mean that it did not damage (at least any further) either party’s credit score.  However, paying it off may not be realistic.  If you have to keep paying it, the best way to have that ordered, in my opinion, is to have one spouse responsible for that monthly payment, with the other spouse having access to the records to insure that the payment is actually made.  The one who is not ordered to pay it should keep regular check on the payment status.

It is important to remember that just because the Family Court orders that the husband or wife has to pay a particular joint debt bill, the creditor is not bound by that order and can seek repayment from either debtor.  This confuses a lot of Family Court litigants.  They seem to believe that the Court order supersedes the contract that was entered on the loan.    Such is not the case and an uninformed litigant could find him or herself being sued for collections on a debt that the other spouse is ordered to pay.  The remedy in such a situation is a Family Court contempt action.  But that won’t fix the credit damage.

But what about debt that is only in the name of one spouse?  This is different.  My typical advice is that if the debt is only in one name and is not a debt that the other party should legally or morally be responsible for paying, then it is best for the Order to remain silent on the debt.  Why would anyone want to be ordered to do something?   So for example, if you got a TV at Best Buy, bought on credit in your name only, and you kept the TV, you would not want to be ordered to pay that bill.  However, if you got a TV at Best Buy, in your name only, and your spouse kept the TV, you might want to seek  to have your spouse ordered to pay that bill.   If your spouse is ordered to pay that bill, you should monitor the bill and make sure it gets paid.  Assuming it is paid is not a safe course of action.

If the other spouse insists on an order similar to the “Each party shall pay the debt in his or her own name” a better option is to ask the Court to order “There are no marital debts to divide.”  This does not put an additional affirmative order on either party regarding the debts.

There are many options for dividing debt and assets at the time of separation or divorce.  The only way to know all your options and make the best choice for yourself is to hire a qualified domestic relations attorney.  It is folly to attempt to resolve these issues without competent counsel.

With 22 years of Family Court experience, M. J. Goodwin is the founding attorney of Goodwin Attorney at Law, LLC, with offices in Anderson, South Carolina.  Goodwin practice trial law in Upstate South Carolina, with an emphasis on Family Court matters.